BETHESDA, Md. — Quality Care Properties Inc., which owns 239 nursing homes and assisted-living facilities operated by HCR ManorCare Inc., said it will give its primary tenant more time to respond to an Aug. 17 court filing requesting the struggling Toledo-based company be placed into receivership.
Meanwhile, Quality Care will be dealing with new leadership in its attempt to collect back rent from ManorCare.
Paul Ormond, 67, who has lead HCR ManorCare since it was formed in 1998 through a merger of Health Care & Retirement Corp. of Toledo and Manor Care Inc. of Washington, has stepped down from his roles as chairman, president, and chief executive of the company.
The new president and CEO is Steve Cavanaugh, who was formerly executive vice president and chief operating officer of ManorCare.
ManorCare, based in a Summit Street building in downtown Toledo, has about 1,700 employees in the Toledo area and more than 50,000 nationwide. It is the nation’s second largest operator of skilled nursing homes and assisted living centers. It operates its facilities under the names of Manorcare, Heartland, and Arden.
In a U.S. Securities and Exchange Commission filing on Monday, Quality Care said it had agreed to give ManorCare until Oct. 18 to formulate a response to the receivership request and also to allow more discussions on how to resolve the large debt the financial-troubled Toledo firm owes its landlord. The time extension is subject to court approval.
Quality Care contends that ManorCare contractually owes it $385 million in future rent under the terms of a master lease signed in April, 2011 and reaffirmed in February, 2013. Quality Care said its lease allows it to seek receivership should ManorCare default on its rent payments.
The landlord claims that ManorCare has paid just $17.6 million in rent for September and paid only $23 million in rent in August. Quality Care, which is a real estate investment trusts, maintains that ManorCare’s monthly rent is about $39.5 million.
After failing to pay the rent in full in both June and July, Quality Care filed a complaint against ManorCare on Aug. 17 in California Superior Court in which it requested an independent receiver be appointed to manage the skilled nursing and assisted living/memory care facilities that the Toledo firm now operates.
Quality Care Properties, based in Bethesda, Md., did not respond Monday to requests for comment.
However, ManorCare issued a statement confirming the management changes and indicating Mr. Cavanaugh will now lead efforts to resolve the dispute with Quality Care Properties.
“Under Steve’s leadership, HCR ManorCare will continue to work with QCP to find a consensual solution to the challenges facing the two companies,” part of the statement read.
ManorCare also said it expected that Mr. Cavanaugh, who has been with the company for 25 years in various roles, would succeed Mr. Ormond.
Mr. Ormond led Health Care & Retirement Corp. since 1986 when it was owned by Owens-Illinois Inc. He was in charge of HCR ManorCare in 2007 when the nursing home operator, which had been a publicly traded company, was bought by private equity firm the Carlyle Group for $6.3 billion.
Contact Jon Chavez at jchavez@theblade.com or 419-724-6128.
First Published September 25, 2017, 3:51 p.m.
